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DocuSign Gains on Post-Earnings Analyst Accolades and Upgrades

DocuSign trades higher after posting quarterly earnings that handily beat analysts’ estimates, prompting a raft of Wall Street accolades and price-target upgrades.

Shares of DocuSign  (DOCU) - Get DocuSign, Inc. Report traded higher on Friday after the e-signature company posted quarterly results that handily beat analysts’ estimates, prompting a raft of accolades over the company’s prospects as well as several price-target upgrades.

DocuSign on Thursday posted fiscal third-quarter earnings of 22 cents a share, well above the 13 cents a share forecast by analysts polled by FactSet. Sales rang in at $382.9 million, up 53% year over year and also above expectations of $361.2 million.

Shares of DocuSign were up 7.27% at $247.80 in trading on Friday. The stock has gained more than 205% year to date. 

The results spurred a raft of analysts accolades and upgrades, starting with Citi analyst Walter Pritchard, who raised his price target on DocuSign to $282 from $257 and maintained his buy rating on the shares amid what he sees as "higher growth for longer" as the pandemic shifts businesses to digital signing permanently.

JMP Securities analyst Patrick Walravens also raised his price target on DocuSign to $276 from $261 and kept an outperform rating on the shares, given what he called in his own research note DocuSign’s "long-term capital appreciation" potential as well as strong opportunity in its international business.

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Needham analyst Scott Berg, who initiated coverage of DocuSign in mid-November with a buy rating and a $240 price target, lifted his one-year target to $275 following the results, which also showed subscription revenue growth of 54% year over year.

Influential Wedbush Securities analyst Dan Ives also jumped on the DocuSign-praising bandwagon, calling DocuSign’s results “stellar” and noting that the pandemic-driven shift to e-signatures “has likely permanently changed among enterprises moving forward.”

Ives maintained his outperform rating on the stock and $270 price target. 

Deutsche Bank analyst Taylor McGinnis struck a more cautious tone, raising his price target $235 from $225 though keeping his hold rating on the shares, noting that even though management's tone on pipeline activity and deal momentum remains strong, “they are suggesting that the recent high-growth rates are likely not sustainable.”

The results and raft of upgrades came as little surprise to Eric Byunn, a partner with financial services- and technology-focused growth equity firm Centana Growth Partners, which focuses on companies in digital technology and payments, among other sectors.

“Digitization was already a trend, and the pandemic has only accelerated it,” said Byunn. “While travel and in-person meetings will return after the pandemic, things like cash payments or opening an account with a paper application or showing up in person to show a drivers’ license will continue to go away.”